Mayskoe is in the top five largest gold deposits in Russia. It is located in the Northeast of Russia, in the Chukotka region, 180 km from the seaport of Pevek.

More than 90% of the deposit’s ore is refractory and requires a preliminary treatment to achieve an acceptable recovery ratio. Refractory character of the ore is the main reason of the previous attempts being unsuccessful to develop this deposit.

Prior to acquisition of Mayskoye by Polymetal, a few Russian institutions and Aker Kvaerner company (Australia) carried out design works for the Mayskoye Plant. The original design provided for the underground mining of ore and its further processing by flotation, bio-oxidation and RIL.

Polymetal revised the execution part of the feasibility study for the Mayskoye development project using a different flowsheet. Mayskoye is envisioned by Polymetal as one of the refractory concentrate sources for processing at the Amursk hydrometallurgical plant in the Khabarovsk Territory. Processing of the Mayskoye concentrate at the Amursk plant will realize Polymetal’s strategic idea of a hub creation in Amursk for processing of refractory gold concentrates from various deposits located in the Russian Far East.

It’s planned to transport this concentrate from Mayskoye to Amursk by sea during the navigation season from the port of Pevek to a few Far Eastern ports followed by further transportation to Amursk by rail.

Expenses concerning the concentrate delivery from Mayskoye to Amursk (180 km by motor transport to the port of Pevek and 4,800 km by sea and from Pevek to Amursk by river) will be economically sound by a significant cost cutting due to the concentrate processing in Amursk as compared to processing it in Pevek owing to lower power, labor and materials cost. Recovery ratio by autoclaving is predicted to be higher by 2-3% than by bio-oxidation.

By purchasing Mayskoye, Polymetal has fulfilled a number of its strategic objectives:

• Purchasing of a world-class gold asset with significant resources and high grades with a considerable probability tof turning them into reserves’ category;
• Getting a base in Chukotka – a Russian region considered to be the most promising in discovering new world-class gold deposits;
• Savings on capital costs as a result of synergy with Amursk Plant.

In 2009, a new process procedure for Mayskoye ore treatment was issued, primary grinding mill was purchased, construction of water storage and tailing pit commenced, the remaining processing equipment will be delivered to Mayskoye during 2010-2011. Long-term contracts for large equipment are finalized, for example: SAG mill and underground mining equipment.

The construction at Mayskoye commenced in May 2010. It’s expected that the first ore will be mined by the end of 2010 and the plant will be put into operation in Q1 2012. The first shipment of concentrate to Amursk and receiving the first gold is scheduled for Q4 2012. Polymetal plans to reach a full design capacity both in terms of mining and ore processing in 2013.

In August 2010 the Company announced a successful completion of the feasibility study of the Mayskoye gold deposit and the development design was confirmed by Snowden Mining Industry Inc., an independent auditor, as well as a start of the processing plant construction on-site.